LEC 2. WHAT is "MARKETING"?

The answer to the question marketing is very simple...... Marketing is the creation of "value"...... Creation of value for someone so that they pay happily and come back for more later..... I am telling you this word "value"....... probably the most important one in management and mkting........ So marketing is much more than selling... Selling is only the final transaction..... Marketing involves:

1.   Identifying a market segment (you cant sell everything to everybody….. look at Rotomac and Mont Blanc). Segmentation can be done on the basis of Geography (would you sell Pringle in Kerala??), Demography (What do you think…. How much would a person earning Rs. 10,000 spend for buying a pen….. Don’t consider my case!!!), Psychography (Based on lifestyle, attitudes, values…. Look for an example!!) and Behaviour (How do you use a product, How does one drive?, How price sensitive is your target segment?)

2.   Targeting simply means to identify the one target segment that holds the most promise for you. You need to identify that the needs and wants of which segment matches well with the capabilities of your organization. Maruti too could have targeted the higher end market but they did not and chose to cater to the “economy” segment and rest is history. Targeting is more like your birthday cake being cut into slices and you choosing the one with the cherry. Pick up the segment that not only matches your strengths, holds enough potential but is also within comfortable reach to service.

3.   Positioning (creating an image of your product and your company in the consumer’s mind)……. Your product features, its price, where is it available…… all these will contribute to its “image”…. Don’t you agree??? Imagine Prada available in Phase 10 Mohali!!! Of course you cannot know positioning till you know of two guys called Al Ries and Jack Trout!!! Please do me a favor and look them up!!

You will see that the above given three will need you to decide upon the following decisions:

1.     What to make?

2.     Whom to sell it to?

3.     At what price?

4.     How much service will they expect?

5.     What do I brand my product as?

6.     Do I brand it at all?

7.     What do I say in my ads?

8.     Where do I give my ads?

9.     Do I give ads at all??

10.  How should I treat my customers?

11.  What should I ask them?

12.  Till when should I keep talking to them?.............................................

The list  is endless….. Asking these questions are in my opinion marketing…….

To understand the meaning of the term marketing it is important to analyse why we needed it in the first place. Till the late 1800s and early 1900s (The Industrial Revolution), consumption guided production. That means that people used to produce what they needed and since international trade had already started, some stuff would be procured through import. But in most cases the imported goods would be what we can call “lifestyle” or “luxury” goods like tobacco, silk, precious metals etc. Therefore in simple terms we can say that demand dictated what would be produced or procured….. OK??? Then came the industrial revolution and an increased movement of people across large distances, that too obviously due to increasing technological developments like the steamboat….. Now two things happened:

1.   Due to the industrial revolution, people could manufacture the same stuff but in extremely large quantities. Obviously you would need to “sell” all that you could make to convert the ability to produce into money…. Right??? The good thing was that at that time, the number of people who would need anything that could be manufactured was huge……. Take for example, a product called lens….. I am sure you will agree ever since people have lived on this planet many must have been experiencing reduced eyesight too…… So the need for spectacles was always there….. Till the ancient Assyrians (look up “Lens” on Wikipedia….amazing) invented the lens, no one had an idea that you could “magnify” something…… So the demand for a product called spectacles did always exist but no one, not even the consumers knew that they “needed’ something like that….. Therefore when spectacles began being produced, they would be gobbled up as soon as they would be made but the problem was that it must have been extremely time consuming and slow to grind lens manually and then set them into frames…… So production was the biggest limiting factor. So the demand would always have been far greater than the supply. So when industrial revolution gave the manufacturers the ability to use power (electric or mechanical), tools and machines to manufacture glasses in large numbers, they would have been faced with an ever hungry market and the more people they could reach, more they would have been able to sell….. right??? This example is also an example of “Latent Demand”…….. find out what that is…..

2.   The second thing is in my humble opinion, a more important occurrence……. Imagine you are living in India at the beginning of this century……. You are a commoner with just enough money to make ends meet (that used to be the case with max people in India)…… You have a bad eye sight and you see that the local Zamindaar who too had a bad eye sight has procured something from a far off land that can make him see properly!!! Wow!!! But the problem is that he had to shell out more money than you would earn in your life time……. A very sad, frustrating and common experience for many even today……. Don’t you think so???? Remember how it feels like when you see something you dearly wanted being purchased and used so casually by others….. Orra, D90, Semaster, Harvard, Columbia, V-Rod, SUV, Seychelles, Alaska…. This feeling would have been felt by many who could not afford to buy but yearned to do so…… Where does marketing fit in???? Arrey….. You have a market that is primed, fertile, bursting with desire….. do you have the innovativeness and timeliness to tap such huge virgin markets??? Explore the story of Nirma and how one gentleman; Karsanbhai Patel beat the hell out of a global giant…HLL!!

The point is…… By late 1800s and early 1900s, people had the capacity to design, manufacture and transport products in ways that did not exist earlier….. So we can say that during this time, we got the capability to “create new utilities” not only by creating new products (design utility, functional utility etc…..) but also the Price Place Utility!! How???? The more a manufacturer could manufacture, the economies of scale meant that his manufacturing cost went down dramatically, add to that the developments in transportation reduced the cost of inputs dramatically…… Therefore the selling price of most things fell sharply to become affordable to common people all across the globe!!! That is the price utility!! As for the place utility…… it is simple, you could make you product reach the end user further away that you could earlier!!!

So the world saw what would be later called the “Product Orientation” form of marketing…. Most of the guys (business men and academicians) were more concerned about manufacturing, production, costs, efficiencies etc…… In a way marketing till this time was a stepchild of Economics……

This went on like that for decades…… The manufacturer and seller were the kings….. The consumer had to buy what ever was manufactured at whatever cost at whichever place!!! Then came WW 1 and WW II…. I will not go into the details, but at the end of WW II the industrialized nations had an incredible amount of manufacturing capacity left idle……. In war these manufacturing capacities were needed to keep the forces supplied, now that the war was over, you faced an incredibly fast decrease in guns and ammo!! These units then migrated to manufacturing products for civil use and here too, the production was so large that “selling” became necessary…… So the “Selling Orientation” emerged in late 40s and Early 50s…… The focus shifted from manufacturing to the ability to “sell” that was being manufactured…… By the way can you think of any company that was set up specifically for the wars and later had to shift to consumer goods??? Some should come mind immediately:

·    BSA (Cycles…. The kind Maj. Rahul used to fly on in school!!) was Birmingham Small Arms company!!

·    Our “tashan” Bullet!!! Royal Enfield was the best gun manufacturer of the time!!! By the way the so called revolt of 1857 was according to the most accepted version of history began as a result of animal fat coated cartridges made by Lee Enfield!!

·    You must have seen your Dad banging away on his “Remington” at work!!! They I guess still make some of the best known high power rifles…..

·     Others: BMW, Rolls Royce, Harley Davidson!!!!

The 1970s saw the birth of what we call as the “Marketing Orientation”. By this time many bigwigs in the field of marketing began saying that it is the customer who “should’ be at the centre of marketing and it should be the consumers needs and wants that should dictate what will be made, marketed and how…… In way the commentators were saying that the “customer” should be the ultimate consideration while designing any marketing strategy….. Be it the product design, features of the product, its price, the packaging, where will you make it available, what will be said in its ad……. In simple words all the four Ps which Dr. Kotler gave should be focused on the consumer satisfaction of consumer needs…… that automatically meant that organizations now needed to “know” the consumer better…… Not only for understanding their needs and then designing products accordingly…… but to see how they reacted to the products……. That gave birth to marketing research as well…….

So what we call marketing today emerged in the late 1970s and this concept too has evolved over time. The growth in technology and media, the increasing understanding of the consumer psyche, new research etc…….. has brought in many developments to the concept of marketing. We have seen emergence of concepts like Service Marketing, Customer Relationship Management, e marketing, ERP etc…… All these changes and developments are reflected in the changing definition of marketing……..

The American Marketing Association (Did you visit their site??) in Oct 2007 gave the following changed definition of Marketing: 

“Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”

So this is the current accepted definition of marketing and the academic answer to the question, What is Marketing…….

What I think of marketing is walking the tightrope to create situations that will make all the stakeholders (the consumer, the suppliers, wholesalers, retailers, the company owners, management, the government and of course you too!!) happy. Why do I call it the “walking the tight rope”?? Remember if you say that the aim of marketing is to make the consumer happy, that will be a problem as the shareholders are not investing money for “making people happy”…….. They need returns….. So in efforts to make consumers happy, you forget to fatten the bottom line…… you have had it!! Similarly to keep your bosses happy if you start indulging in questionable practices, then the government may get unhappy…… then there are the suppliers, the dealers and wholesalers, the retailers …….. a product will have to provide value to keep all of them happy!!!!

That dear students is Marketing!!!

Please try to analyse the definition, look up demand and try to find out if there is a difference between marketing and selling…….

 

Lec 1: What is the Market?

I am starting a new "lecture series" aimed at teaching the basic fundas of marketing (or at least what I think about them) to my better half....... She knows marketing..... Hell she is into it..... But her new found love for teaching and her her self declared need to know "My Version of Things" is the motivation behind this effort..... So why blog it??? I am assuming it might prove useful to any one of you guys who want to get back to basics of marketing..... a very rudimentary and simplified version!!

But please be warned.......... These are my opinions and they may not necessarily and in many cases they wont conform even to Mr. Kotler (With due apologies Sir)........ I will post a series of lectures..... Here is the first one on my take of the term "market"

LEC 1. WHAT is "MARKET"?

Any study of marketing and its allied subjects should begin with the academician developing an answer to the seemingly innocuous and simple question like, What is “Market”? But Aashima, you would be surprised that even seasoned faculty and researchers find it difficult to give an acceptable answer to this question!!!

The “oversimplified” explanation would be that “Market is place where buyers and sellers get together to buy and sell”.

The Economic definition would be: “Market is a structure that allows transaction between buyers and sellers.” In this case transaction stands for exchange of goods, services and information for money of equivalent value.

The Sociological view point would be: “The market is a social institution comprising of relationships that allow exchange and transaction of goods and services”

The problem with this “oversimplified definition” is that the term is being explained only as a geographical location where a physical transaction is taking place. But the term “market” has been used to describe other socio economic entities too. For example…. You meet a business man and ask hi how he is doing and invariably (at least these days!!) the answer will be, “Market bahut mandi hai”… Now he is using the term market to describe “demand”. Another limitation of the simplified explanation is that it fails to accommodate net marketing, marketing where “value” may be exchanged but no physical good may have been bought or sold, and most importantly the definition fails to highlight the fact that the market is “platform of social interaction” (social is the key word here).

Therefore the criticism of the oversimplified definition is that it fails to integrate the economic view and the social view. It also fails to accommodate emerging concepts like the web based marketing.

Keeping all this mind, I prefer to define market as: “Market is a socio economic institution that allows for creation and exchange of value.”

The words “exchange instead of transaction and the word “value” instead of goods and services have been brought in. Of course we begin the definition by calling “market’ a socio-economic institution. If you try to analyse any purchase or sale you may have made in your life involved interactions between human beings (which is the obvious part of the definition) and an interaction of social relationships and phenomena.

Let me clarify……

The “Social – Economic” Linkage

You buy something from Sec 17 and in another case you buy something from Amazon.com….. In case of the Sec 17 purchase, you will have definitely had to interact with a number of people to just complete the transaction….. At least you would have had to interact with the shopkeeper!! So at least in this case it is easy to see, how the market involves interaction of people. In case of Amazon.com, the person was faceless or as in ebay he or she might be a total stranger connected to you by the net. So in case of web based examples, the interaction between people has been taken online. This is quite like talking to some one in person and talking to some one on the phone. So market is definitely a social institution.

Explanation of the economic view is simple and you would do well to remember that before marketing came into independent existence, it existed as a part of economics. The economic angle to describing the market involves an appreciation of the fact that even though you and the shopkeeper in sec 17 shared a social relationship, it was a temporary relationship which created to facilitated to complete the exchange. Now exchange, transaction and value are core economic concepts. So market is an economic institution too.

One more thing that you need to keep in mind while discussing the “social – economic” linkage is that whatever we have done over the past many decades in the name of “marketing” has been heavily influenced by the sociological variables and whatever we have done in the name of marketing has most definitely affected the society itself…… Think about it…. Think of examples…..

Why “Value”?

Value is also one of those funny words which have separate meaning in English, Economics and Marketing!!! But why I love the word is that it is able to “adapt” easily in all three areas and in fact I consider it the one word that is able to bring al three together! Let me illustrate……. Remember the cup I used to like so much and which ultimately became one Rahul’s first victims…… What would you understand if I said that the cup was very valuable” to me….?? Am I trying to say that it was “valuable” as in expensive????? Or am I using the word value as “Value = Benefit/Cost???? These are the English and the  marketing view on value…… I am not even beginning to talk on the economic’ view as it will open a huge Pandora’s box (Imagine they have a theory of value!!!)

But whatever be the usage, We bought the cup, we paid something for it….. today I am sure I will be willing to “pay” a lot more if someone offer it me again….. What do you say????

In the definition the word value has been used to indicate that whether you buy a physical product or service, you do that for the “value” it provides to you and you “pay” what you deem fit considering the value it provides…… I hope it is clear…..

And how do you "create" value??? Easiest and a very simplified answer to this would be that you provide what the customer needs, when he needs it and whereever he needs it. Of course the emerging face of marketing asks one to do more. In fact, Marketing, in its current form has only begun after you have been able to deliver the goods to the consumer. elivery of value can be said to have taken place only if you have created a "customer experience" far greater than what your customer expected, greater than what any of your competitor could have offered and sustain that level of service for the entire time the customer associates with your company..... Whew!!! And you thaought that marketing was only selling!!!

Why “Exchange”

According to AMA (American Marketing Association www. Marketingpower.com), the definition of “exchange” is, “All activities associated with receiving something from someone by giving something voluntarily in re-turn.” What I like here is that it introduces “voluntariness” to the definition and as you may agree, the ideal market would be where every trade is voluntary, no coercion or force at all….. On the other hand you will find that the definition of transaction is too cold, non social and too economics oriented….. According to Wikipedia…. Transaction is, “An agreement, communication, or movement carried out between separate entities or objects, often involving the exchange of items of value, such as information, goods, services and money.” I am sure you agree with me!!!

So my answer to the question, what is “Market” would be: “Market is a socio economic institution that allows for creation and exchange of value.”

Find out

1.    Metamarket

2.    Marketplace Vs Market space

62 hrs in Mumbai

I saw the beginning on Nov 26^th and I was there at the end on Nov 29^th. I wish I could have been there, with the guys……. No senseless bravado but it was frustrating to be a helpless spectator. Now that its over, Now that the shock has transformed into seething anger, It is time to raise some questions.

 

Who were the terrorists?

I don’t know. But if the media and the security forces are to be believed, they were individuals from Pakistan who had come via a trawler, then a fishing boat, then rubber dinghies to Mumbai. Even though the mail claiming responsibility for the attack mentions “Deccan Mujahedeen”, it is believed to be a front for the “Lashkar” terror syndicate.

 

How did they reach Mumbai?

The indications so far are that they travelled by a Pakistani trawler then they hijacked a fishing boat of the coast of Porbunder in Gujarat, they killed the guys on the boat and abandoned it off the coast of Mumbai and travelled by rubber dinghies to Mumbai.

 

Did they have help from someone India?

Apart from the inept politicians an failed intelligence network, Yes, they most definitely had someone on the inside too. The security forces and the government have also accepted as much. My logic is pretty simple; You cannot carry that amount of ordnance that would have been used to hold of the Indian security forces for the amount of time that they did in the backpacks they were carrying. I would also surmise that they already had terrorists inside the Taj and Oberoi, either as guests or as workers. You see, they displayed intimate knowledge of the layout of both the facilities.

 

So, Was Pakistan involved?

Yes and No.

Why No?....... Pakistan is a country and quite like ours, they too have a very diverse set of people, beliefs, values and motivations. As not every Indian is responsible for the crime that Indians commit, not every Pakistani is responsible for the actions of certain radical groups in Pakistan. I have had the chance to interact with a few people from across the border and any educated citizen of India should expect, they are no different from us.

So even if the terrorists were from Pakistan, it would be unwise to stereotype and blame a nation for the acts of few of its citizens.

Why Yes?........ It is common knowledge that the most elaborate “terror farms” exist in Pakistan. Originally a west sponsored and supported response to USSR in Afghanistan, today these terror schools are motivating, training and sponsoring terrorists to fight wherever they deem necessary. So it was as the government puts it, “Elements in Pakistan” not necessarily overtly supported by the government but still originating in that country.

So the bottom line is that radical Islamist terror groups “based in Pakistan” were responsible. But that does not mean that Pakistan itself was the sponsor of this attack.

 

Why is Pakistan such a hotbed of terror activities?

Pakistan is a land of people who are quite like us. In fact, I have had the opportunity to meet many Pakistanis and most I found were unbelievably polite, beautiful and cultured. Yes, they do have those vitriolic spewing illogical idiots, but then we have so many of them in India that we should not mind. We cannot take the oral high ground as we have also been brought up on the staple that “Pakistan is the enemy”. They are just like us, only that the percentage of radicals over there is higher and they are louder than the normal, sensible and liberal.

The problem lies in what Pakistan had to go through ever since its independence. The following factors are very important.

1.       Military Rule.

2.       The underdeveloped democratic systems.

3.       The presence of extremist organizations.

4.       The weak economy.

Pakistan has seen four military rulers and has remained under military rule from 1958–71, 1977–88 and from 1999–2008. The military had an agenda of its own and they remained focused on India. Unfortunately the civil and democratic institutions never had the time to develop. The biggest problem however is that Pakistan was “used” by the west and today whatever we are facing is the fallout of that. The so called western democracies once supported, funded and supplied radical forces based out of Pakistan to drive USSR out of Afghanistan. The Pakistani establishment also did not mind that as US support on many issues including the Kashmir issue was a great benefit to them. The Pakistani military was eyeing Afghanistan for “strategic depth” which they were lacking in any confrontation with India. The western countries, especially the USA used these desires Pakistan had and in return they used Pakistan to establish factories to create and train “Mujahedeen” to fight USSR. Not only did they support, they actually armed them to the teeth. Once USSR left Afghanistan, Pakistan inherited a vast number of “Jehadi” forces who had extreme views, armed and trained. All of a sudden they had no enemy to fight. You cannot expect a whole generation of radical fundamentalists to lay down their weapons and return to a normal life only because you want them to. The monster USA had created was hungry and it had no prey left. The looked around and found the issues of Kashmir, Bosnia and the “US imperialism”.

The west used Pakistan, created the terror factories to fight USSR, and then abandoned Pakistan. Now we all suffer the consequences.

 

Was it an intelligence failure?

Yes, it seems so. Reports have now emerged that there were enough indications to ring the alarm bells and it seems that the information got lost in the labyrinthine Indian bureaucratic maze connecting independent agencies like the police, RAW, IB, the Coast Guard and the NSA. Mr. Shivraj Patil, the former Home Minister had himself in a speech warned of the sea route being used for terror attacks as back as 2006. Months and days preceding the attacks saw increasing number of indications that something like this was being planned but unfortunately the government agencies involved failed to coordinate and collate the reports which would have indicated a clear and present danger.

Yes, it was an intelligence failure.

 

Why is the Indian polity drawing so much flak?

Quite simply put, because of their incompetence, their tendency to use such tragic events as political platforms, their callous comments and their partisan behaviour. Some notable points:

·      The Home Minister failing to provide answers to increasingly deteriorating law and order in India. Just try to recollect the number of attacks India has seen in the past few months.

·      The Maharashtra government failing to act on credible threats.

·      R. R. Patil commenting that “Such small incident or two keep happening in big cities”. His logic was that the terrorists had plans to kill 5000 people and since they managed a score of only 180, it is no big deal.

·      Vilasrao Deshmukh taking his actor son and Ram Gopal Verma along on the first official visit to the spot after the terror attacks and him constantly alluding to the centre and Sonia Gandhi to save his skin.

·     Failure of the PM and leader of the opposition Mr. Advani presenting a united front. Mr. Advani was not accompanied by Dr. Singh to Mumbai, which he should have and Mr. Advani chose to miss the crucial all party meet to discuss the situation and future course of action. On his arrival in Mumbai, Mr. Advani actually said that “this government had failed as the attacks during the NDA tenure were not this big!!”

·      The CM of Kerala insulting the family of a fallen hero.

·     Mr. Mukhtar Abbas Naqvi using derogatory language to insult civilian protestors questioning the competence, integrity and intentions of the political establishment.

 

What is the lesson for students?

Please do not be misguided by rhetoric and sensationalism. Please study the whole problem and develop a holistic and balanced view on the issue of terrorism in India. Do not make the mistake of blaming any one religion or community for terrorism. Extremists and terrorists come in all shades and colors.

This is the time for you to initiate a process of constructive dialog. I am sure if the future citizens of India can break free from the hype, the stereotyping, the rhetoric, the sensationalism and the hatred for each other cultivated by our political masters, this will become a peaceful and secure place to live.